We have isolated the cDNA for a tyrosine kinase receptor that is expressed in the nervous system of Aplysia californica and that is similar to the vertebrate insulin receptor. Binding studies and immunocytochemical staining show that the receptor is abundant in the bag cell neurons. Application of vertebrate insulin to clusters of bag cell neurons stimulates the phosphorylation of the receptor on tyrosine residues, and exposure of isolated bag cell neurons to insulin produces an increase in height and a decrease in duration of the action potentials that can be detected within 15-30 min. These effects were not seen with insulin-like growth factor-1. In voltage-clamped neurons, insulin produces an increase in the amplitude of the voltage-dependent Ca2+ current that can be blocked by preincubation with herbimycin A, an inhibitor of tyrosine kinases. Insulin also enhances a delayed K+ current. We suggest that insulin-like peptides regulate the excitability of the bag cell neurons.